An Entity with a Large Volume of Customer Remittances by Mail

question 12

Multiple Choice

An entity with a large volume of customer remittances by mail could most likely reduce the risk of employee misappropriation of cash by using

• A) Employee fidelity bonds.
• B) Independently prepared mailroom prelists.
• C) Daily check summaries.
• D) A bank lockbox system.

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Definitions:

Fair Value

The estimated market price of an asset or liability, based on current market conditions and comparable transactions.

Increasing-Balance

A method of calculating depreciation that applies a constant rate to the asset's net book value each year, resulting in increased depreciation charges over time.

Units-Of-Production

A depreciation method that allocates cost based on the units produced or the machine hours used during the period.

Straight-Line

A method of allocating the cost of a tangible asset over its useful life in equal yearly amounts.